NO.083

IMF PREDICTS STRONGER GROWTH FOR THE AUSTRALIAN ECONOMY

The IMF in the September 2003 World Economic Outlook expects that Australia

will continue to be one of the fastest growing advanced economies in the world

next year.

Despite the weak global economy and the lingering impact of the drought, the

IMF forecasts that the Australian economy will grow by 3 per cent in 2003, before

rebounding to 3.5 per cent in 2004. The IMF also expects the unemployment rate

to remain low and inflation moderate. The IMF has again commented favourably

on Australia’s sound fiscal position, noting that public debt continues to be

paid down.

The IMF expects the global recovery to accelerate in the second half of 2003

and into 2004. A slightly weaker outlook for the economies of Europe and Non-Japan

East Asia has been broadly offset by a more positive outlook for the United

States and Japan. However, the risks remain somewhat slanted to the downside

despite the easing of geopolitical uncertainties and the continued flow through

of policy stimulus already in the pipeline. The IMF remains supportive of accommodative

monetary policy among advanced economies but urges a credible strategy to achieve

fiscal consolidation over the medium-term.

The good performance of the Australian economy has occurred against a backdrop

of weak global demand, an extensive drought and a number of temporary international

shocks. The Government’s commitment to sound economic management has ensured

that Australia remains well placed to meet these challenges.

CANBERRA

18 September 2003